Correlation Between Steel Dynamics and Great-west Core
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Great-west Core at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steel Dynamics and Great-west Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Great West E Strategies, you can compare the effects of market volatilities on Steel Dynamics and Great-west Core and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steel Dynamics with a short position of Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Great-west Core.
Diversification Opportunities for Steel Dynamics and Great-west Core
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Great-west is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core and Steel Dynamics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steel Dynamics are associated (or correlated) with Great-west Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Core has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Great-west Core go up and down completely randomly.
Pair Corralation between Steel Dynamics and Great-west Core
Given the investment horizon of 90 days Steel Dynamics is expected to generate 23.95 times more return on investment than Great-west Core. However, Steel Dynamics is 23.95 times more volatile than Great West E Strategies. It trades about 0.11 of its potential returns per unit of risk. Great West E Strategies is currently generating about 0.18 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 4, 2024 and sell it today you would earn a total of 962.00 from holding Steel Dynamics or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Great West E Strategies
Performance |
| Timeline |
| Steel Dynamics |
| Great-west Core |
Steel Dynamics and Great-west Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Great-west Core
The main advantage of trading using opposite Steel Dynamics and Great-west Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Great-west Core can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Great-west Core will offset losses from the drop in Great-west Core's long position.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
| Great-west Core vs. Great West Securefoundation Balanced | Great-west Core vs. Great West Lifetime 2020 | Great-west Core vs. Great West Lifetime 2020 | Great-west Core vs. Great West Lifetime 2020 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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